‘Unthinkable’ benefits cut will make Universal Credit worth less than in 2013

Universal Credit will be worth less to families than it was in 2013 if the planned £20 per week cut goes ahead in April, researchers have warned.

The benefit has not kept pace with inflation, Citizens Advice Scotland said, which will render it worth 11.5 per cent less than when it was introduced — roughly the same as a weekly food shop or monthly energy bill —  if ministers do not keep the weekly increase. 

“It is unthinkable that the Government is considering slashing unemployment support to such low levels in the middle of an unemployment crisis,” Jonathan Reynolds, shadow work and pensions secretary, told The Big Issue in response to the findings.

“The Chancellor must offer certainty to families now and cancel the cut to Universal Credit.”

The Department for Work and Pensions has been approached for comment.

The increase, worth £80 per month, was introduced at the start of the pandemic to support people through the economic fallout of Covid-19. Campaigners and opposition MPs have long called for it to be made permanent, a move which could stop 6.2 million people losing £1,040 from their annual income.

But the Government has resisted the calls so far, with work and pensions secretary Thérèse Coffey telling MPs “discussions are ongoing”.

The uplift only returned Universal Credit to its real-terms value from eight years ago, Citizens Advice Scotland said. This is largely due to the benefit freeze between 2015 and 2019.

Single claimants under 25 will lose a quarter of their monthly allowance if the cut goes ahead. Their standard monthly allowance, currently £342.72, will drop to £257.33.

Meanwhile couples over 25 who claim together could lose nearly 15 per cent of their income, from £594.04 to £509.91.

The £20 weekly increase, amounting to around £80 a month, covers most of an average monthly fuel bill for a small family of three or four people, which is £97 according to Octopus Energy.

It is not enough to cover the UK average weekly food and drink cost which sits at £61.90 or nearly £250 per month, Office for National Statistics figures showed.

“The pandemic has caused redundancy and reduced hours, and this looks set to continue for much of the year. Now is the time to strengthen the safety net for these families, not cut it,” said Nina Ballantyne, spokesperson for Citizens Advice Scotland.

“Universal Credit has always failed to keep up with the cost of living. It makes no sense to make cuts during a pandemic. Without proper support, we’ll see increases in poverty and food bank use, and a strain on other public services like the NHS. 

“The £20 uplift has been an essential boost to struggling families. The reasons it was introduced still exist, so there is no logical case for removing it.”

Debt charity StepChange said nearly 75 per cent of people who turn to the organisation for help would be unable to afford essentials after the cut. 

The work and pensions committee has called on the Government to keep the increase for another 12 months, at least, and extend the increase to people on other benefits like Employment Support Allowance.